The three-musketeers syndrome. Three friends - could also be two or four - are embarking on a startup journey. There is an atmosphere of brotherhood (or sisterhood): one for all and all for one. The gains will simply be divided equally.
This is the atmosphere I regularly find at startups. I fully understand and it makes me reminisce of my own startup times, nothing beats comradery and joining forces to tackle the world as a team. Meanwhile I have learned: A few good agreements will make all the difference and carry you further and more harmoniously.
Having uncomfortable discussions among founders and agreeing to some basic rules of engagement will increase your chances of success. If there are no agreements, individual expectations will likely clash and are a recipe for frustrations, internally between founders, among staff and investors alike.
Firstly you want to look at team composition. Founders with similar competenties are not ideal. People who complement each other (introvert/extravert; technical/commercial) keep the team on edge and focused. Some teams should consider adding or changing the team composition.
Alignment on the vision and strategy are essential, how do the founders see the startup develop? With or without external financing? Build something for the long term or sell after 5 to 10 years? How will the shares be divided? How will we arrange compensation?
Clever startups also prepare for possible scenarios. What if a founder wants to move to Singapore? What if someone wants to quit? What if someone wants to work 4 hours a day? And much more uncomfortable, what if someone does not perform?
We see a lot of musketeers who are jointly the boss, co-ceo, or they prefer not to have titles. It sounds good and fits the brother/sisterhood philosophy but the world does not work that way. As an investor I want to understand who takes what decisions and takes responsibility. Clients, staff and suppliers also want to speak to the boss. Even if you take decisions jointly, someone needs to be the external face of the company. Agreeing on roles and responsibilities is key to a good functioning team.
My advice: Plan two two-hour sessions to talk about vision, scenarios, roles, shares and compensation. Talk about divorce scenarios, you never want an ex-employee founder who can frustrate the company no matter how hard it might be to agree on exit scenarios. Get help (mentor) if you can't agree or need assistance. And please, put it on paper, create a shareholder agreement as your constitution, there are many resources to help you online or, even better, use a lawyer. Yes, this takes time and energy and could set you back a few hundred. But believe me “the way to startup success is paved with good agreements”. Incidentally, investors prefer teams who have taken these steps proactively. You will increase your chances of making a positive impact on the world, exactly what makes startup life so magnificent!